Value Added Tax (VAT) is charged on the consumption of goods and services. Be it a new business or an established business, filing for VAT return acts as a savior and also holds a good image in the eyes of the government. Today almost more than 180 countries have accepted the procedure and this got spread worldwide at a faster pace. The Middle East countries, especially the United Arab Emirates, which has been tirelessly working on setting itself as a business hub, has understood the importance of VAT filing. Realizing this, the GCC countries have entered the VAT law and agreed at a VAT rate of 5%. If you are building your business plan for UAE, you should be aware of the VAT return filing and VAT related process existing there. Do have a look at the VAT filing terms and processes and why it got accepted at a global level.
In simple terms, VAT return filing states how much VAT is to be paid or reimbursed by the tax authorities. A VAT return is done quarterly and it helps the business to track the business VAT path.
VAT is also charged for business entities involved in the business activities with other countries. While carrying out these activities it’s better to be VAT compliant to avoid any kind of penalty that becomes a hindrance in the way.
The taxpayer is responsible for calculating the VAT return during the filing process. It is calculated considering the following factors:
In the end, if you owe more VAT than you are able to claim, then you need to pay the difference. If the situation goes vice-versa, you can either ask for the refund of excess VAT or can carry forward the excess to next return period.
All registrants are required to file VAT return, irrespective to the type of VAT registration or sales, purchases, output tax, input tax, etc.
Businesses can file their VAT return online using the Federal Tax Authority (FTA) portal, where one would find the VAT 201 form. To access this form, the taxpayer must log in to the FTA e-Services portal, and select VAT->VAT 201- VAT Return on the navigation menu. Here, one is required to fill in information regarding the following:
Once the form is duly filled and submitted, the taxpayer would receive an e-mail from the FTA confirming the submission of VAT return form. After submitting the return, the tax payer has to pay the due tax, if any, through one of the various payment channels like E-dirham, exchange houses, online bank transfer, over-the-counter bank payment, etc.
VAT 201 is a declaration that needs to be made by the end of every tax period. It reflects the VAT that the vendor charged on supplies or details for which he is liable to declare output and input tax. Let’s understand the contents of this form that makes it a very important document in the eyes of VAT law.
The details required to be filled in VAT Form 201 include the following:
Initial details like Tax Registration Number (TRN) are required to be mentioned. In case if a tax agent is submitting the documents on behalf of the taxpayer, then Tax Agent Approval Number (TAAN) is required along with the tax agency name.
The VAT Return period is important for any business as it sets a deadline for filing a return and also helps the entity to keep a track on their filings.
The details regarding standard tax supplies need to be furnished according to the Emirates level.
Here the details regarding the purchases made needs to be furnished along with 5% tax.
This section includes two parts: the VAT payable and VAT recoverable.
The VAT payable section mentions the tax that is due to the tax authority during the tax period whereas the VAT recoverable section states the total value of input tax that is recoverable for the tax period. The deduction between these two sections would ultimately result in a sum that is net VAT payable or recoverable.
This section is important for businesses who have applied for Profit Margin Scheme during the VAT period. It doesn’t have any financial impact.
The authorized signatures need to be inked on the documents before submitting them for VAT filing. The tax-payer should cross-check the documents properly before submission. The option of saving the details under draft and submitting it later is available.
Thus, you can see how important it has become for business entities to implement VAT filing process and also to become VAT compliant while carrying out multi-national businesses. VAT filing not only protects your business but gives a legal assurance and proof of your business existence and it holds an upper-hand in the arena of tax payments and avoids financial loss. Are you trying to figure out how to initiate the process? Well, we have a solution for you.
Alriyadah has been working as a business consultant and has been continuously dealing with businesses helping them setting their accounts, taxation and finance domain. The firm has been delivering outstanding services that resulted in retaining satisfied clients at a global level. Some of our services include:
Dealing with VAT is a tedious process. Our business experts would start from the very scratch and make it much easier to deal with. Alriyadah strives to give you the transparency, control and a better understanding of your business dealing that would maximize your profit and lowers your expenses to a great extent. To initiate the process, do contact us – we’d be happy to assist you.